Marijana No Comments

Liverpool sees biggest decline in house prices since 2008

Liverpool has seen the highest drop in house price value since 2008 in England and Wales, according to the latest research by GetAgent.

GetAgent investigated Middle Layer Super Output Areas (MSOAs) and compared the average house price change for these areas since the financial crisis.

Using MSOA area codes, the research revealed that the 023 area of Liverpool saw the biggest drop in value with a decline of 44.21% from £116,821 to £65,178.

The 044 area of Bradford, 005 area of Hartlepool and parts of County Durham also saw declines in house price value.

Colby Short, founder and chief executive of GetAgent.co.uk, said: “While we tend to focus on top-line statistics the UK housing market is made up of thousands of micro-markets and so what is happening in one area can be the polar opposite to another.

“Looking at these more granular levels of data provides an interesting insight that differs from the usual blanket, generic observations and demonstrates how even in the same city, the market can perform differently from one area to the next.”

London saw major growth in house prices since 2008 with Camden (022) and Lambeth (003) seeing growth of 389.82% and 322.74% respectively.

In Greater London, the 010 area of Cambridge (156.71%) and 008 area of Winchester (149.11%) have also experiences high house price growth.

Short continued: “Currently, we’re seeing the London market struggle with other major cities in the Midlands and further north enjoying stronger price growth.

“However, looking at the long-term picture since the financial crisis, we can see a real contrast across the different areas of the UK with the capital flourishing overall, while other macro-areas have experienced really difficult recoveries.”

By Jessica Nangle

Source: Mortgage Introducer

Marijana No Comments

UK house prices suffer surprise July fall as housing market ‘treads water’

UK house prices continued to “tread water” in July as they slipped 0.2 per cent month on month, Halifax warned today.

However, annual growth rose 4.1 per cent thanks to the housing market’s poor performance in 2018, the bank’s latest house price index found.

Russell Galley, managing director of Halifax, said: “The average UK house price fell slightly for a second month, as the market continues to tread water with marginal increases or decreases in each monthly period.

“That said, it’s worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.

Halifax said a drop off property sales in the early months of summer raises the spectre of a possible downturn.

But Galley added: “New buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.

“In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.”

Summer slump or Brexit paralysis?
Marc von Grundherr, director of estate agent Benham and Reeves, asked: “Are we seeing a further indictment of Brexit paralysis? Or is this a seasonal blip given that the summer months simply tend to see lower demand?”

He believes the drop was the latter, adding: “For the UK property market to have seen year on year growth of over four per cent despite the best endeavours of our politicians to de-rail public sentiment, has to be viewed as at least resilient – perhaps even astonishing.”

Buyers look ‘beyond Brexit’
Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said the latest figures show buyers are “looking beyond Brexit”.

“Prices are being underpinned by shortage of stock, improving affordability and low mortgage rates,” he added.

“What is more important is the number of transactions, which remain sluggish and protracted as sellers reluctantly come to terms with new market realities.”

Property lender MT Finance said the market is “flat” with house prices continuing to fall, but said the decline was “relatively small”.

“However, there is a risk that come the autumn, the robustness of the property market will be put to the test,” director Joshua Elash added.

“If Brexit or deflationary forces lead to the Bank of England increasing the base rate, there will be consequential pressure on homeowners to sell as they struggle to deal with meeting the cost of increased mortgage payments.

“In this scenario we would expect to see more significant downward pressure on prices.”

By Joe Curtis

Source: City AM

Marijana No Comments

How lifetime mortgages support younger generations

Since the beginning of 2019 we have seen a distinct rise in the value over 55-year olds are releasing from their properties to help their loved ones.

Our data shows that the average loan now sits at over £110,000, up a quarter compared to 2018, when it was just over £85,000. In fact, loans taken out to gift money to family are now the largest of all. Nearly one in five of the mortgages taken with us in 2019 are for this purpose.

There are a number of factors driving this trend, the first being that families are using the substantial growth in the value of their property over the years, to help the younger generations get onto the housing ladder.

According to recent studies, UK house prices have increased from around £180,000 in 2013 to around £248,000 in 2018, a 40% increase while earnings have risen by just 11% over the same period.

Add to this new research from Zoopla that found the average city-dwelling Brit needs to earn £54,400 a year to buy their first home, it is no surprise that parents and grandparents are choosing to free up money for their own properties to help their younger relatives get onto the housing ladder.

The second factor driving this trend is so parents and grandparents can pass on a potential inheritance earlier.

The rise in life expectancy is causing wealth to move down generations at a much slower pace.

As demonstrated by the ONS intergenerational wealth transfer report, currently people aged 55 to 64 are the most likely age group to receive inheritance, which is when most people are typically more financially stable and less in need of the extra cash.

For parents and grandparents seeing younger family members thrive financially and in particular get on the property ladder is a milestone they want to see them achieve.

Lifetime mortgages are increasingly enabling families to help each other and share their wealth over the generations, which in turn is helping boost the economy and in particular the housing market.

The third factor contributing to this trend is product innovation, which has made lifetime mortgages more accessible for those wanting to gift money to their children or grandchildren.

For example, many lifetime mortgages have the option to make voluntary repayments of up to 10% of the initial loan amount each year, or to pay off up to 100% of the interest, because of this we have seen a number of parents who have taken equity from their property to help their children and then the children make the interest payments.

By making payments the interest on the loan is reduced and any remaining inheritance is protected.

Lifetime mortgages are boosting the economy by enabling homeowners over 55 years old to spend funds that would have otherwise been tied up for years to come.

The range of lifetime mortgages available also means that more homeowners than ever can access the funds in their property.

We will continue to evolve our lifetime mortgages to ensure we can provide products to meet the everchanging needs of consumers.

By Nici Audhlam Gardiner

Source: Mortgage Introducer

Marijana No Comments

UK house prices are stuck in the doldrums

UK house prices are set to tread water while incomes rise, making property more affordable, says Merryn Somerset Webb.

The numbers aren’t looking good for residential property investors. House price growth in the US fell to a mere 1% at the beginning of this year, according to the latest report from the Dallas Federal Reserve. Look at global data across the 18 largest economies in the world and things don’t look much more encouraging. This could be the year in which we see “global growth dip to its lowest pace in a decade”. Investment is slowing fast, says Oxford Economics.

The UK is no outlier here. The Nationwide index and the Rightmove Asking Prices index show prices and asking prices respectively to be all but flat. The Halifax House Price index shows a better annual number but suggests prices fell mildly in June. You can see the same trend in Hometrack data, which suggests that the falling prices we have seen in London are beginning to spread: over a third of homes are now in areas with annual price falls (the higher value the market the more likely this is), although the absolute levels of falls is small. So what next? Most analysts expect the market to tread water from here (at best) – although if a new PM were to pull a Brexit deal from the hat we could of course see a little London bounce.

A flat market…
This is probably correct. There is still some support for prices. Housing starts are falling slightly (so the supply of housing is not rising much). Interest rates are low and will go lower if Brexit goes horribly wrong. The banks’ wholesale funding costs have also edged down, and that should soon feed into mortgage rates. At the same time wages have jumped (year-on-year growth excluding bonuses hit an 11-year high in April) and household disposable incomes are also on the up.

That makes houses – even at today’s silly prices – seem more affordable. Prices, says Nationwide, are likely to be at least supported by “healthy labour market conditions and low borrowing costs.” That said, there isn’t much to push prices up either. They are still high relative to incomes. The tax and regulatory hit to buy-to-let is discouraging buyers in that market. An unwelcome (to big property owners, at least) overhaul of property taxation may be on the way. And the Help to Buy scheme (which has played a clear part in pushing prices up) is likely to be at least scaled back soon. Put all those factors into the mix and it is hard to see a rebound in prices in 2019 “or beyond” says Capital Economics.

… is good news
The key thing to bear in mind there is that this is not bad news – unless you very recently paid too much for a house. One thing we have all agreed on in the UK for decades now is that houses are too expensive relative to average earnings. That makes it tough to get on the ladder and tough to move up the ladder. Add today’s high levels of stamp duty to your cost of buying and it’s nasty out there.

But the fact that house prices are not really rising in nominal terms, combined with the small real rise in wages over the last two years, is beginning to change this situation. In 2007 Nationwide’s house price to earnings ratio for the UK was 5.42. At the end of 2016 it was 5.25. Today it is 5.03 times. That’s not ideal – but if this gentle drift down continues and we end up at more like four times, it will suddenly be an awful lot easier to buy (and sell) houses. That would be a very good thing.

Head for Hampshire
Nevertheless, for those of you determined to find the next hot location in the property market and make your fortunes the easy way, Anne Ashworth writing in The Times has an idea for you. She suggests checking out age profiles. Why? Because the younger the crowd, the higher the potential for growth. In areas with an older demographic, you can expect to see sales and downsizing (the cash from which then gets spread around children and grandchildren who won’t necessarily live in the area). In one with a younger demographic you can expect to see the opposite.

Look back over the last decade, says Lucian Cook of Savills and you will see this in action. Those areas with large concentrations of people in their 40s have seen much greater price appreciation (up 56%) than elsewhere. With that in mind, look at somewhere such as Aldershot in Hampshire. There 39% of households are headed by someone between 31 and 40. They won’t be downsizing any time soon.

By: Merryn Somerset Webb

Source: Money Week

Marijana No Comments

UK house prices surge 5.7 per cent in June

UK house prices shrank by 0.3 per cent in June compared to the previous month, according to data released today.

But the growth rate rocketed 5.7 per cent on an annual basis last month, according to Halifax’s latest house price index, to take the average UK house price to £237,110.

That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2 per cent – the best in two years until today’s figures.

Russell Galley, managing director of Halifax, said: “This extends the largely flat trend we’ve seen over recent months.

“More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty.

“Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”

However, he warned that a “major restraining factor” for the UK housing market was the lack of houses up for sale.

“With the ongoing lack of clarity around Brexit, people will be looking for more certainty in the coming months, both to encourage them to list their property and to create the confidence needed to encourage buyers,” Galley added.

“Of course, the likelihood of continued historically low mortgage rates will underpin prices in the near term.”

Halifax figures are a ‘complete outlier’
Howard Archer, chief economic adviser to the EY Item Club, dismissed Halifax’s data as a “complete outlier in annual terms”.

It compares to Nationwide’s annual growth rate of just 0.5 per cent in June and Office for National Statistics (ONS) data of 1.4 per cent growth for April.

“There are signs that housing market activity may have got a little help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit looks to have been limited,” Archer said.

“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but this has recently shown some signs of levelling off.”

Meanwhile, former Royal Institution of Chartered Surveyors (Rics) chairman, north London estate agent Jeremy Leaf, also questioned the figures.

“It paints a confusing picture with the annual house price increase actually greater than it was last month while comparative figures from 12 months ago are also unreliable,” Leaf said.

Buyers ‘looking beyond Brexit’
Leaf added that Brexit uncertainty has softened UK house prices, with today’s figures likely to dampen buyers’ appetites as prices continue to fall.

However, he said that many buyers have stopped delaying purchases and are pushing ahead with house hunts even amid the political uncertainty hitting the market.

“We are finding that some buyers, including some investors, are looking beyond Brexit and political uncertainty and are prepared to go ahead if they can perceive value,” he said.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “The market trend continues to follow a similar direction of travel to the one that we’ve observed since the beginning of this year; those who need to move are doing so, regardless of politically-driven news headlines, and are far more likely to make the decision to purchase based on their own circumstances should the need dictate.

“The availability of competitive mortgage products is also providing many with support, as lenders remain very much ‘open for business’ with some repricing downwards of late in order to gain more traction in the market.”

What will UK house prices do after Brexit?
EY’s Archer predicted that even in the event of a Brexit deal, the UK’s prolonged departure from the bloc will hamper growth of UK house prices over 2019.

The accounting giant predicts prices to rise only around 1.5 per cent this year.

“Prolonged uncertainty will weigh down on the economy and hamper the housing market,” Archer said.

“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”

While a lack of homes on the market and very low interest rates should prop up the market in the meantime, Archer warned the nature of Brexit will dramatically impact UK house prices.

With a deal, house prices could grow by around two per cent over 2020.

But in a no-deal Brexit, Archer warned house prices could “quickly drop” by as much as five per cent.

By Joe Curtis

Source: City AM

Marijana No Comments

UK house prices near record high for new homes on market

UK house prices for newly-marketed properties neared a record high this month, spurred on by a cluster of UK regions shrugging off recent political uncertainty.

Four northern regions witnessed their highest ever asking prices in June, pushing property prices nationally up 0.3 per cent to just £91 below June 2018’s record figure of £309,439.

According to Rightmove, the regions of East Midlands, the North West, Wales and Yorkshire & the Humber all enjoyed record asking prices.

That is despite newly-marketed houses in the capital falling in price by an average of 0.4 per cent this month.

“More buoyant markets in the north and midlands are helping to nudge up prices due to the seemingly relentless strength of buyer demand,” said Miles Shipside, Rightmove director and housing market analyst.

“Buyers in four regions are seeing higher new seller asking prices on average than ever before.”

In London, Shipside blamed a combination of stretched affordability, moving costs including stamp duty and Brexit uncertainty for the 0.4 per cent drop in the capital, where prices in June have fallen for the last three years.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The complex current market dynamic is driven by varying levels of consumer sentiment.

“One might suggest that those areas which are seeing more ambitious asking prices are somewhat insulated from the ongoing turbulence at Westminster – that or buyers and sellers in those areas are opting to ignore the headlines and carry on regardless, according to their personal circumstances.”

The scale of the UK’s housing problems were underlined this morning, with new research showing that less than one in 10 towns offer affordable property for nurses, teachers, paramedics, police and firefighters.

Some eight per cent of towns offer affordable housing for key public sector roles, tumbling from 24 per cent five years ago.

Central London remained the least affordable area, while the top three most affordable towns in Britain for key workers are all in the north west.

Halifax, which produced the results, said the gap is due to UK house prices outpacing earnings growth for public sector workers.

Average house prices have risen by 32 per cent compared to key worker average annual earnings growth of seven per cent.

By Sebastian McCarthy

Source: City AM

Marijana No Comments

UK house prices show biggest annual rise since Jan 2017 – Halifax

UK house prices rose at the fastest annual rate since the start of 2017 during the three months to the end of May, mortgage lender Halifax said on Friday, though it added the figure was flattered by weak growth a year ago.

Halifax said house prices in the three months to May were 5.2% higher than in 2018, up from 5.0% annual growth in the three months to April, their highest since January 2017 and beating a forecast in a Reuters poll of economists.

Britain’s housing market has slowed since 2016’s Brexit referendum, driven by price falls in London and neighbouring areas, exacerbated by higher purchase taxes on homes costing over 1 million pounds ($1.27 million) and on second homes and small landlords.

Halifax said prices rose 0.5% on the month in May, in contrast to predictions of a fall, and April’s monthly house price growth was revised up to 1.2% from 1.1%.

“The overall message is one of stability,” Halifax managing director Russell Galley said.

“Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates,” he added.

Since the start of this year, Halifax house price data have been consistently stronger than figures from rival mortgage lender Nationwide, which reported annual price growth of just 0.6% in April.

The most recent official data showed house price inflation of 1.4% in the year to March, and Pantheon Macroeconomics economist Samuel Tombs said he expected price growth to remain around this level for the rest of this year..

“Households’ real incomes still are rising at a solid rate, while the recent decline in interest rate expectations should reduce mortgage rates soon,” he said.

Reporting by David Milliken; Editing by Alistair Smout

Source: UK Reuters

Marijana No Comments

The era of dizzying rises in house prices is over

To outsiders the British can seem slightly obsessed with house prices. Yet it is an asset that matters. Two-thirds of UK households are owner occupiers and 35% of household wealth is tied up in property.

The value of that wealth has risen by almost 50% in the last ten years. Taking account of rising house prices and rental costs the average homeowner has enjoyed a return of roughly 8% a year in the last ten years – slightly less than the return from equities but far faster than earnings which have risen by around 2% a year over this period. Since the recession the average homeowner has made far more from increases in the value of their home than from pay rises.

But in the last three years the housing market party has tailed off. UK prices rose by just 1.4% in the last year. London prices fell 1.9% but this has been offset by modest gains in most other parts of the country.

Brexit uncertainties and consumer worries about the economy have weighed on the market, compounding the problem of stretched affordability in London and the South (elsewhere in the UK housing is significantly more affordable). Higher rates of stamp duty on more expensive properties and weaker demand from foreign buyers have had their greatest effect on the London market. Meanwhile increased rates of stamp duty on additional homes, reduced tax reliefs and new regulations have dented the attractiveness of buy-to-let.

But what about the long term outlook for UK house prices?

Over the last 40 years ever easier access to credit and ever lower financing costs have driven a dizzying rise in house prices. The liberalisation of the mortgage and financial markets from the 1980s increased the amount of mortgage credit available to home buyers. Interest rates have trended down since the early 1980s, with quantitative easing eventually collapsing the base rate to just 0.25% – a fraction of the peak rate of 16% seen 25 years earlier. Strong growth in population, an increasing number of single person households and a collapse in house building after the recession have added to the upward pressure on house prices.

It is hard to see the heady gains in house prices of recent decades being repeated in the future. With mortgage rates close to all-time lows there is little scope for major reductions in financing costs. Whereas the trend in financial policy in the 1980s and 1990s was towards liberalisation, today it is towards regulation. That has made lenders more cautious and mortgages rather harder to come by.

Politicians and policymakers are alive to the distributional effects of rising house prices. Rocketing prices have increased the wealth of older, generally higher income people, widening wealth inequalities and making it harder for young people to get on the housing ladder. The focus of policy today has tilted to helping first time buyers and those renting while increasing levels of housebuilding.

It’s been hard not to make money out of housing in the UK in the last 40 years. It is likely to be harder to do so in future.

BY IAN STEWART

Source: Reaction

Marijana No Comments

UK house prices gather a bit more speed in April – Nationwide

Growth in UK house prices picked up slightly in April, data from mortgage lender Nationwide showed on Wednesday, adding to other signs that a slowdown in the housing market ahead of Brexit might have bottomed out.

Prices rose by 0.9 percent in annual terms, speeding up from a rise of 0.7 percent in March.

That was the biggest increase since November although it was still weak compared with recent trends in the often surging UK housing market – prices were rising by about 5 percent a year at the time of the Brexit referendum in 2016, according to Nationwide.

In monthly terms, prices rose by 0.4 percent after rising by 0.2 percent in March, also the biggest increase since November.

Economists polled by Reuters had expected prices to increase by 0.7 percent in annual terms and to rise by 0.2 percent compared with March.

Robert Gardner, an economist with Nationwide, said first-time buyers appeared to be defying the jitters around Britain’s still uncertain departure from the European Union, helped by low interest rates and the lowest unemployment rate in more than 40 years.

“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first time buyers entering the housing market in recent quarters,” he said.

The number of mortgages taken out by first-time buyers was approaching pre-financial crisis levels, the data showed.

While prices have been rising across the country as a whole, prices in London have fallen according to various measures of the market, hit by a combination of unaffordable prices for many buyers, tax changes affecting the buy-to-let market and the Brexit uncertainty which has weighed heavily on the capital’s financial services industry.

British Prime Minister Theresa May last month secured an extension to the Brexit deadline until Oct. 31, avoiding the potential shock of a no-deal Brexit for now but leaving the world’s fifth-biggest economy still deep in uncertainty about how it will leave the EU.

Writing by William Schomberg; Editing by Andrew MacAskill

Source: UK Reuters

Marijana No Comments

UK house prices growing at slowest pace in almost seven years

Annual house price growth is at its lowest level in almost seven years, with London house prices suffering most.

UK house prices were up by just 0.6% in the year to February with an average of £226,000, a much more subdued picture than the 1.7% increase seen in the year to January.

It marked the lowest annual increase since September 2012 (0.4%) according to the Office for National Statistics, the Land Registry and other bodies who released the figures jointly.

The national slowdown is largely due to falling prices in London and the South East of England.

Prices in London were down by 3.8% in the year to February, faster than the 2.2% decrease seen in the year to January.

In the South East, prices fell by 1.8% during the year.

Mike Hardie, head of inflation at the ONS, said: “Annual house price growth has slowed to the lowest rate in close to seven years.

“Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the South East for the first time since 2011.”

Jamie Durham, economist at PwC, said “uncertainty around Brexit” was weighing on the capital’s housing market but prices there are still the highest in the UK at an average of £460,000.

He added: “Elsewhere in the UK, however, house prices continued to rise. The highest price growth was in the North West, with annual house price inflation of 4.0%. The Midlands also maintained strong annual house price growth, particularly in the West Midlands, with annual growth of 2.9%.”

Paul Smith, chief executive of Haart estate agents said: “While clarity over Brexit would be helpful – it is not absolutely vital. Although prolonging the inevitable is certainly frustrating, this level of uncertainty has become the new normal, and since the New Year, we have seen buyers sweep their fears under the rug and return to the market.

“Pent up demand has been building for months and Brits are ready to move. The extended negotiation period is not going to stop them.”

Ray Rafiq Omar, chief executive of Unmortgage, said: “There’s a real need to think outside the box to help those who are stuck renting and badly want to own their own home.

“The government needs to take greater steps in meeting housebuilding targets and creating some much needed movement within the market.”

Source: Yorkshire Coast Radio